Investors remained bearish on gold exchange traded funds (ETFs) and pulled out more than Rs 130 crore from the instrument in the first two months of the current fiscal, preferring to invest in equities.

Trading in gold ETF segment has been tepid during the last four financial years. It had witnessed outflows of Rs 903 crore, Rs 1,475 crore and Rs 2,293 crore in 2015-16, 2014-15 and 2013-14 respectively.

However, the pace of outflow slowed in 2016-17 as compared to the preceding three years as investors are focusing on investments in equity as an asset class, an expert said.

According to the latest data available with Association of Mutual Funds in India (Amfi), a net sum of Rs 66 crore was pulled out in 14 gold-linked ETFs in April and another Rs 71 crore in May, taking the total to Rs 137 crore.

Gold ETFs have been continuously seeing a withdrawal. It has last seen an inflow of Rs 20 crore in October. Prior to that, an inflow of Rs 5 crore was witnessed in such instruments in May 2013.

On the other hand, equity and equity-linked saving scheme (ELSS) saw an infusion of around Rs 20,000 crore during the period under review.

The asset base of gold funds dropped to Rs 5,298 crore at the end of May from Rs 5,377 crore in April-end. It was at Rs 5,480 crore at the end of last fiscal.

"International gold prices have remained in the range of USD 1,050-1,350 per ounce after falling off the highs of USD 1,900 in 2012-13," Kaustubh Belapurkar Director of Fund Research at Morningstar said.

Gold prices moved up from lows of USD 1,050 in 2015 to USD 1,350 in late 2016, but have recently corrected again. Given that the rupee has strengthened against the dollar, it has resulted in the domestic prices of gold falling even further.

"This coupled with the fact that the domestic equity markets have been doing well, Gold Funds/ETFs are not a very popular investment option currently with investors. Investors have not been allocating fresh funds to these funds and marginally pulling out assets over the last four years," Belapurkar said.

Gold ETFs are passive investment instruments that are based on price movements and invest in the metal.